I came across this great article today on how to choose a financial advisor. It is written by Hank Coleman (yes, he’s American!) on his blog called “Own the Dollar”. Although it is aimed at a US audience, the tips contained in the article would be appropriate to anyone wanting some tips on how to choose a financial advisor.

In summary, the tips are:

1. Heart of a teacher - You have to know what your planner is doing with your money and why.  It is your money.  A financial planner should teach you, show you all of your options, and let you pick where you want to invest your money.
2. Licensed – In Australia, a financial advising practice needs to hold, or be part of a network that holds an Australian Financial Services Licence, as issued by ASIC.
3. Certifications – Check your financial advisor’s qualifications – are they trained to give financial advice?
4. Salesmen & compensation – Financial advisors are paid either through commissions on the products they sell (although this is slowly being phased out) or by you through hourly fees or service fees. Discuss up-front how the advisor is compensated and make sure you are comfortable with the method of payment. Financial advisors have to earn a living and you as the client need to understand that “you get what you pay for” – if you pay peanuts you will get a monkey! Personally, if there are three professionals representing me that I want to be well-fed and happy, it is my solicitor, accountant and financial advisor!
5. References & Interview - Your advisor should be passionate about personal finance and investing, passionate about teaching you and explaining personal finance to you, and above all, good with money! Ask trusted friends and relatives for references. Treat your selection of a financial advisor like a job interview.

You can read the full article here - How to choose a financial advisor

Click here to go to the website of the Australian Securities and Investment Commission (ASIC) website to download their Fact Sheet - Guide to choosing your financial advisor

Also check out the websites of the Financial Planners Association and the Certified Practising Accountants to find a financial advisor near you.

What about you? Got any tips you can share about choosing a financial advisor?